As the Bank of England put up interest rates last week, there has been a rush for fixed rate remortgages the Financial Times reports.

Interest rates are expected to rise again this year so it makes fixed rate remortgages even more appealing to buyers.

Buyers are taking the opportunity to lock into fixed-rate mortgages with favorable rates, ranging from a low of 4.95 per cent to about 5.1 per cent depending on the number of years of the contract.

Customers are trying to beat mortgage lenders before they adjust their rate tables’ inline with the higher interest.

Variable-rate mortgage holders have been hit by a third rate rise since last August while fixed-rate mortgages have not been effected.

Economists expect the interest rate rise on mortgages could see the housing market stabilize as buyers become more cautious. The interest rate rise caught everyone by surprise and will make homes even less affordable.

Neil Chegwidden, head of research at Cluttons, cut his forecast for 2007 house price growth from 9 per cent to 2 percent.

House prices dropped 1% in December, a survey by the Halifax showed.

This takes the annual growth rate to 9.9%, and compares with a 1.7% monthly rise in November when the annual rate was 9.6%.

The country’s largest mortgage lender said the cost of an average home fell to £186,035 in December.

Experts believes that a combination of higher interest rates, increase inflation, higher household utility bills have but greater pressure on household finances which has helped subdue house price growth.

Expects are now predicting house prices to increase by 4% this year.

Mortgage soared to a three year high in November, the Bank of England reported.

Total mortgage lending jumped to £9.8bn, while the number of new mortgage approvals rose to 129,000 in November from 128,000 in the previous month, the highest since December 2003.

With the continued rise in the housing market an increasing number of first-time buyers borrowing from their parents. About 14,000 people a year are remortgaging their homes to release an average of £74,000 to help relatives get on the property ladder.

After a steady rise from 107,000 to 127,000 new mortgages between April and September, the numbers have stabilised in the last two months with fears of interest rate rises.

Offset mortgages are set to grow in 2007 as borrowers take advantage of new deals on the market. At present offset mortgages account for only a relatively small percentage of the overall mortgage market.

Many households looking for a new mortgage would be better off with an offset mortgage. Offset mortgages allow savers to use their savings to lower overall debts and subsequently enjoy lower interest repayments.

There are now over 30 providers offering offset mortgages.

First time buyers spent an average of £151,565 on their first home in 2006, compared to £137,122 in 2005 a recent research from the Halifax. In 2001 the average price paid was £77,914.

The average first time buyer had an income of £29,610 in 2006 and paid a 19% deposit of £28,130.

First time buyers have dropped 7%, from 340,000 in 2005 to 315,000 in 2006 the lowest total since 1980. In1997 there were 503,000 first time buys.

Tim Crawford, Group Economist at Halifax said, ‘First time buyers continue to struggle to climb onto the property ladder with the average house price paid by a new buyer entering the market now above £150,000. This is close to double the level of five years ago. First time buyer affordability is now an issue across the UK with the average house price paid by a first time buyer more than £100,000 in each region of the UK for the first time in 2006.’